DESCRIPTION: (Applicant's Abstract) Drug abuse treatment services for Medicaid clients are undergoing substantial change as fee for service is replaced by capitated financing. Little is known about the impact of these new organizational arrangements and payment mechanisms. One key question is whether drug abuse treatment services should be integrated with physical health care or be carved out and addressed separately. Another important question is whether drug abuse treatment services for Medicaid clients should be delivered by traditional public sector agencies or be provided by mainstream private sector organizations. The impacts of these organizational and financial arrangements on special needs drug abuse clients have yet to be examined. Oregon was one of the first states to implement capitated financing for Medicaid drug abuse treatment services. In May, 1995 treatment for drug abuse problems became the responsibility of 19 prepaid health maintenance organizations (HMOs). The HMOs were required to refer half their Medicaid clients with drug abuse problems to traditional public sector agencies. The other half of the Medicaid clients could be treated within the HMO's private sector service system. The HMOs and the public sector agencies were also required to provide the state alcohol and drug abuse agency with detailed information on clients including (at intake and at treatment completion) drug of abuse, quantity of abuse, frequency of abuse, modality of treatment, and completion of treatment program. The proposed project will examine the impact on Medicaid clients' drug abuse treatment completion rates, drug use, and consequences thereof of: (a) assignment to integrated versus carved-out drug abuse treatment and (b) enrollment in a for profit versus nonprofit health maintenance organization. The study will study in detail three special needs populations of Medicaid clients: (a) people with co-morbid mental health problems, (b) pregnant women, and American Indians.